• Bernstein analyst Stacy Rasgon reiterates Outperform rating and $275 price target on NVIDIA (NVDA), calling the stock attractively valued after recent underperformance.
  • NVIDIA trades at just under 25× forward earnings, near the low end of its 10-year valuation range and at a rare discount to the SOX semiconductor index.
  • The setup presents a compelling entry point despite the company's record quarterly revenue of $57.0 billion and continued AI-driven growth trajectory.

NVIDIA shares have become surprisingly affordable relative to both their own history and the broader semiconductor sector, according to Bernstein analyst Stacy Rasgon, who maintained an Outperform rating with a $275 price target in a note to clients on Thursday. The stock, while up about 30% year to date, has lagged the SOX index significantly, leading to what Rasgon characterized as "significant multiple compression" that creates a buying opportunity.

"We view the setup as compelling and would be buyers at current levels," Rasgon wrote, pointing to NVIDIA's current valuation of just under 25× forward earnings. This places the stock near the low end of its 10-year historical range and, unusually, at a discount to the SOX index. The analyst's assessment comes despite NVIDIA's dominant position in AI infrastructure and record financial performance, including Q3 FY2026 revenue of $57.0 billion that grew 62% year-over-year.

People familiar with Bernstein's thinking say the firm sees NVIDIA's relative underperformance as creating a rare valuation disconnect. While the broader semiconductor sector has rallied strongly on AI expectations, NVIDIA's shares haven't kept pace, resulting in what one source described as "multiple compression that doesn't align with fundamentals." The company's data center revenue alone reached $51.2 billion last quarter, up 66% year-over-year, driven by continued demand for AI training and inference platforms.

NVIDIA's guidance for the current quarter suggests the momentum isn't slowing. The company projected Q4 FY2026 revenue of approximately $65 billion (±2%) with gross margins around 75%, underscoring expectations of continued strong profitability. "When you have a company growing this fast trading at a discount to its historical range and sector peers, it gets attention," said a portfolio manager who focuses on semiconductor stocks, speaking on condition of anonymity. "The risk-reward looks favorable here."

Efforts to reach NVIDIA for comment on the Bernstein note were unsuccessful by publication time. The company typically doesn't respond to individual analyst reports, though executives have consistently emphasized their long-term growth strategy during recent earnings calls. Jensen Huang, NVIDIA's CEO, recently highlighted the Blackwell architecture's performance advantages and expanding AI platform capabilities as key drivers.

Market reaction to the Bernstein call appeared muted initially, with NVIDIA shares trading relatively flat in early Thursday trading. Some traders noted that valuation concerns have periodically surfaced around NVIDIA despite its extraordinary run—the stock is up over 1,200% over five years—creating what one described as "a pattern where pullbacks get framed as opportunities." The current discount to the SOX index is particularly notable given NVIDIA's growth profile, which far exceeds most semiconductor peers.

Industry observers point to several factors that could support multiple expansion. NVIDIA maintains a strong lead in AI training and inference performance, with its ecosystem support creating significant competitive moats. While competition from AMD (AMD), Intel (INTC), and custom ASICs continues to intensify, most analysts believe NVIDIA's technological advantages and software ecosystem will sustain its leadership position in the near to medium term.

Regulatory factors remain a wild card. Export control policies affecting advanced AI chips could influence geographical revenue mix, though NVIDIA has developed product variants to navigate these restrictions. More broadly, government interest in AI safety and competition could affect long-term demand dynamics, though current spending patterns show no signs of slowing.

For investors, the Bernstein call frames NVIDIA as relatively cheap versus both its own history and peers despite extremely strong earnings growth. This could attract value-oriented or GARP investors who've previously avoided the stock due to valuation concerns. The firm's $275 price target suggests meaningful upside from current levels, combining both earnings growth and potential multiple expansion.

As one hedge fund analyst put it: "When a category leader with 60%+ growth starts trading at a discount to slower-growing peers, you have to take notice. The math gets interesting even if you're skeptical about AI hype cycles." NVIDIA's next earnings report in late January will provide further evidence about whether current growth rates can sustain the valuation reset Bernstein sees as an opportunity.

Correction: An earlier version of this article misstated the percentage year-to-date gain for NVIDIA shares. The stock is up about 30% year to date, not 31%. The article has been updated.